The federal income tax exemption for health insurance:

Question

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The federal income tax exemption for health insurance can cause the individual's bottom line cost of health insurance to decline, as employers may provide health insurance as a tax-free benefit, leading to a lower overall cost for the employee. Option A is incorrect as the net wages of the employees are not lowered, but rather the overall cost of health insurance may be reduced. Option B is incorrect as the value of the exemption remains the same regardless of the marginal tax rate. Option D is also incorrect as the exemption does not directly affect the quantity of medical care demanded.

The Federal Income Tax Exemption for Health Insurance